Tesla’s Three Big Contradictions

There’s a whole lot of smoke around Tesla right now. Between Elon Musk’s flamethrowers and his public pot smoking, a thick haze of nonsense is obscuring the truth behind America’s most intriguing automaker. Is it all smoke and mirrors (so to speak), or is this promising company on the verge of changing our energy future?

Investors are struggling to see the answer clearly. On Friday, news broke that Tesla’s chief accounting officer was leaving after less than a month on the job. The market initially reacted like it was big news, sending the stock plunging more than six percent on the day. By Monday, though, investors had shrugged it off, reversing those losses and then some.

The indecision on Tesla is understandable, given all the contradictions that surround it. A telling one emerged from Musk’s recent confessional interview with the New York Times. In it, he lamented his 120-hour work weeks and complained of time pressures that forced him to cut short his time at his brother’s wedding this summer. But then contrary facts emerged: it turns out that Musk was away for five days at the time of the wedding, and stopped at the “Game of Thrones” set in Ireland on his way back. Likewise, is it necessary to spend nights sleeping on the factory floor when you can carve three hours out of your day to toke up with Joe Rogan?

For the outsider, it’s hard to get a read on even the relatively inconsequential matter of Musk’s schedule. But the contradictions run much deeper than that. Here are three that could be central to Tesla’s future.

Is Tesla taking SEC compliance more seriously?

Yes: The going-private thing was a bad look on many fronts. One of them was the fact that Musk announced his half-baked plan (sorry, couldn’t help it) by tweet, rather than filing an 8-K. When Tesla learned that Chief Accounting Officer Dave Morton was departing, it didn’t get cute with the news. It filed an 8-K, with a brief and supportive quote from Morton. Hey, it’s progress.

No: The only thing worse than not filing an 8-K is filing a misleading one. The 8-K quotes Morton as saying “I have no disagreements with Tesla’s leadership or its financial reporting.” CNBC broke a story on Friday, however, that Morton left because his concerns about the potential take-private deal were being ignored by Musk and other executives. Alex Sherman concluded, therefore, that the sunny language in the 8-K “is not necessarily true,” or at least does not “tell the full story here.”

Are the numbers pointing in Tesla’s favor?

Yes: In an email to employees on Friday, Musk said that Tesla was about to report its “most amazing quarter in our history.” On top of that, he said that Tesla would more than double the number of cars it made (53,339) and delivered (40,740) last quarter. Such numbers can help give Tesla the “escape velocity” it needs to pay off its debt and make Musk’s day-to-day antics only noise. He isn’t alone here, either; multiple analysts believe the “fundamentals” are improving.

No: The most important number is not Tesla’s stock price, or even its production rate, but rather its bond prices. And those are telling a scary story. Tesla has $9 billion in debt to pay off by 2025, including $2.7 billion by next year. Tesla’s bonds hit 84 cents on the dollar Friday, signaling worry that it will not be able to do so.

Is Tesla stable at the top?

Yes: In his Friday note to employees, Musk introduced “a number of management changes,” which offer hope for a stabilized leadership. His most important move may have been naming Jerome Guillen as President, Automotive, a role in which he will “oversee all automotive operations.” Musk has resisted naming a COO, but Guillen could go a long way to help. His background as a production specialist could be particularly helpful, given that Musk hasn’t spent his whole career in auto production.

No: The turnover has been staggering. In addition to Morton, VP of communications, Sarah O’Brien, was slated to leave on Friday, and HR head, Gabrielle Toledano, told Bloomberg she wasn’t rejoining the company after a leave of absence. They are three of more than a dozen highly placed executives who have left the company this year, including the engineering chief. Equally concerning is the fact that Tesla still has no known management structure, public org chart, or list of senior leaders.